Russian MoJ consults international and independent firms over new regulations

THE CREATION of a Russian legal regulator took a step closer last week with a ­series of meetings between law firms and the country’s Ministry of Justice (MoJ).

Managing partners and senior advocates met with the MoJ in three separate meetings designed to initiate a permanent institutional framework for a dialogue between the government and the legal community.

The first meeting focused on the establishment of a federal chamber of lawyers. Two other meetings then sawDeputy Justice Minister Yuri Lyubimov hear from Russian and international firms. The legal market in Russia is largely unregulated – anyone, in theory, is able to set up a law firm. A contingent of Russian firms wants to restrict the influence of ­international firms and move towards the system found in India or China.

Meetings of this nature have taken place in the past, but a source close to many Russian law firms said this meeting was particularly significant. “The difference this time is that a prominent figure at the MoJ called the meeting,” said the source.

“Any talks about the legal market between Russian firms and the MoJ will always result in a protectionist agenda. How to ­regulate in general would be a more striking issue. ­Foreign firms are secondary to that.”

Salans Moscow and ­Brussels managing partner Mathieu Fabre-Magnan, who has worked in the country for 17 years, said he was not overly concerned about the meeting because discussions have taken place before with no results.

“There’s clearly an issue over the lack of protection for clients in the Russian market because of the lack of professional indemnity insurance. I understand many lawyers are excited by the Chinese model, but for foreign investors to have the option of choosing international firms they trust is a big part of international business,” he said.
Fabre-Magnan, who set up the Moscow office of Gide Loyrette Nouel in 1993, said regulations were needed. “Minimum requirements for law firms entering the profession would be welcome.”

Vassily Rudomino, senior partner at Russian firm Alrud, said that discussions are ongoing and a preliminary report is expected in the autumn, adding that any changes to the rules would be far-reaching.

“It will affect practically all Russian lawyers of foreign firms and some national firms [whose lawyers] aren’t passing exams to get into the profession,” said Rudomino.

“The non-regulated part of the industry doesn’t have client privilege and the lawyers aren’t protected. There are no ethical rules and standards, and that’s a problem because law firms are operating like normal enterprises, which is wrong. That’s one reason why the government wants to change it.”

The new rules could ­create blanket conditions for all lawyers. One possibility being discussed is that all lawyers practising Russian law will be required to be members of the Russian bar. Those who have not been educated in Russia would have to practise as foreign advocates. Alternatively, there could be a separate self-regulating body for non-advocates.

One senior partner at an international law firm said efforts by some Russian firms to monopolise the market would have a detrimental effect on the quality of legal advice clients could receive. “A regulator of the kind they propose would be another type of bureaucracy in the advocate world and it wouldn’t improve quality. I don’t see the MoJ developing a law society similar to that found in America or the UK for 10-15 years,” he said.

The consultation between stakeholders is expected to continue.